Should Investors Rethink Kinder Morgan After Pipeline Expansion Approval in 2025?

Thinking about what to do with Kinder Morgan stock? You are not alone. Plenty of investors are weighing their next move as the company’s share price continues to reflect both resilience and evolving sentiment in the broader energy market. At a recent close of $27.21, the stock has gone essentially nowhere over the past 30 days, though it has dipped by 1.1% in the last week. Still, look further back and the narrative becomes much more compelling. Kinder Morgan’s stock has gained an impressive 14.5% over the past year and nearly doubled over the last three years, returning a total of 183.8% in five years.

So what is driving these returns? Much of it comes from Kinder Morgan’s ability to navigate shifting market dynamics, staying relevant as energy infrastructure adapts to new supply and demand realities. While some recent volatility is a reflection of global energy market jitters, the company’s solid long-term performance suggests investors are rewarding its stability as well as its growth prospects. The real question many are asking now is whether the stock’s current price truly reflects its underlying value, especially as risk and reward change in the pipeline sector.

When we put Kinder Morgan through six classic valuation checks, it earns a value score of just 2. That means it appears undervalued in two out of our six key measures, which is a signal that calls for a deeper dive before making any big moves. Next, let’s look at exactly how these valuation approaches stack up and suggest a smarter, more comprehensive way to measure value that might surprise you.

Kinder Morgan scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Kinder Morgan Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the intrinsic value of a company by projecting its future cash flows and then discounting them back to today's value. This approach helps investors gauge what a business is truly worth based on its expected ability to generate cash over time.

Kinder Morgan’s latest reported Free Cash Flow stands at $2.2 Billion. Looking ahead, analysts forecast a steady climb with projected Free Cash Flow reaching $4.4 Billion by 2029. In addition to these analyst estimates, further increases are extrapolated out to 2035, showing a consistent pattern of growth.

The end result is an intrinsic value per share estimated by this model at $45.12. Compared to the current share price of $27.21, the stock is trading at a 39.7% discount to its projected intrinsic value, suggesting meaningful upside for patient investors according to the DCF method.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Kinder Morgan.

Our Discounted Cash Flow (DCF) analysis suggests Kinder Morgan is undervalued by 39.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Kinder Morgan Price vs Earnings

The Price-to-Earnings (PE) ratio is one of the most popular tools for valuing profitable companies, as it shows how much investors are willing to pay for each dollar of earnings. For companies like Kinder Morgan that are steadily generating profits, the PE ratio provides a direct window into market expectations and can reveal whether a stock trades at a premium or discount relative to its earnings power.

Growth expectations and company risk play a big role in what is generally considered a “normal” or “fair” PE ratio. A higher PE can mean investors expect faster growth or greater profitability, while a lower PE may reflect uncertainty or lower growth prospects. At the moment, Kinder Morgan trades on a PE ratio of 22.3x, which is well above the oil and gas industry average of 12.7x and also higher than its peer average of 16.8x. This suggests that the market may see Kinder Morgan as less risky or more likely to grow than many of its direct competitors.

To get a more accurate picture, Simply Wall St uses a “Fair Ratio.” This proprietary metric goes beyond basic comparison and considers factors like Kinder Morgan’s earnings growth, profit margin, market cap, industry characteristics, and potential risks to determine the multiple this particular stock deserves. In this case, the Fair Ratio is 19.6x, a level that better reflects the company’s unique potential and challenges than blunt industry benchmarks. With Kinder Morgan’s current PE at 22.3x, it appears the market is pricing in just a bit more optimism about future returns than what fundamentals alone justify.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Kinder Morgan Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story about a company, connecting what you believe about its future with hard financial forecasts, such as fair value, revenue, earnings, and profit margins. Instead of simply relying on ratios and historic numbers, Narratives let you put your perspective front and center, showing how specific trends or risks could impact Kinder Morgan’s outlook and what you think the stock is truly worth.

On Simply Wall St’s Community page, Narratives make it easy to share your thesis or follow others, using interactive tools trusted by millions of investors. Narratives aren’t static, either; they update automatically when new data, earnings results, or news headlines emerge, ensuring your investment view always reflects the latest information. Narratives are especially powerful when deciding whether to buy or sell. By comparing your Narrative fair value to the current share price, you can see if your story points to opportunity or caution.

For example, one investor’s Narrative sees higher liquefied natural gas exports and regulatory improvements fueling years of stable growth, supporting a fair value near $38. Another, focused on competition, aging assets, and energy transition risks, values Kinder Morgan closer to $24. This demonstrates just how much room there is for your own perspective to shape better investment decisions.

Do you think there's more to the story for Kinder Morgan? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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